Joby Aviation vs. Archer Aviation: Here's Which eVTOL Stock Is a Better Buy Today

Imagine a future where you can skip the gridlock of traffic below and soar high above the city as you're whisked away to your destination in the blink of an eye. This could be coming to a city near you in the next few years thanks to electric vertical takeoff and landing (eVTOL) aircraft, which could forever change urban transportation as we know it.

Joby Aviation (NYSE: JOBY) and Archer Aviation (NYSE: ACHR) are two companies leading the way, making progress on key Federal Aviation Administration (FAA) certifications and laying the groundwork for the future of flying taxis, with massive upside potential. According to a 2021 report by Morgan Stanley, the total addressable market for urban air mobility could reach a staggering $9 trillion by 2050.

If you're looking to capitalize on this growth, here are the key things you should know about buying Joby and Archer Aviation right now.

Image source: Joby Aviation.

Joby and Archer are on a shared federal fast-track

Unlike traditional helicopters, eVTOL aircraft use distributed electric propulsion, making them significantly quieter while drastically reducing carbon emissions, so they are better suited for urban transportation. Joby and Archer are frontrunners in this budding eVTOL industry and are working through the FAA's rigorous, multistage certification process, a crucial step toward launching commercial operations.

These companies have also been selected as two partners with the FAA's eVTOL Integration Pilot Program (eIPP), which aims to accelerate the deployment of eVTOL aircraft by allowing selected companies to conduct real-world operations in the National Airspace System.

Joby aims to be a vertically integrated, aerial ride-sharing service

While Joby and Archer share the same overarching goal, they differ sharply in their business models and manufacturing approaches. Joby is pursuing a vertically integrated, direct-to-consumer approach and plans to own and operate its own branded air taxi network, with partnerships with Uber and Delta Air Lines.

Last year, Joby acquired Blade Air Mobility's passenger division, giving it access to Blade's 12 urban terminals and passenger lounges and providing it with an experienced customer transportation business that will allow it to hit the ground running when it begins commercial operations. The company acquired Blade's platform and customer base and will transition the company from helicopters to eVTOLs when it finally launches commercially.

On top of that, Joby designs, engineers, and manufactures its aircraft components in-house. It has a facility in Marina, California and another 700,000 square-foot facility in Dayton, Ohio, which together can produce up to 500 eVTOL aircraft per year.

The company works closely with Toyota, which is a major investor and manufacturing consultant, to optimize in-house production. By focusing on in-house production, Joby owns the intellectual property and manufacturing process, which could enable higher profit margins once it's up and running.

Archer Aviation is taking a different business approach

Archer Aviation is taking a different approach to manufacturing, leveraging partner companies to achieve an asset-light business model. The company has partnered with Stellantis, Archer's exclusive manufacturer, which provides both funding and supply chain expertise to help Archer mass produce its Midnight eVTOL aircraft.

Stellantis helped Archer build out its high-volume manufacturing facility in Covington, Georgia where Archer aims to produce 650 aircraft annually. This model approach helps Archer build quickly, provides support from Stellantis, and saves it the upfront costs of developing its own parts and components in-house.

While Joby aims to be an end-to-end service provider in the eVTOL industry, Archer is taking a dual approach: building its own proprietary ride-share services and selling its Midnight aircraft directly to third-party fleet operators. The company has amassed a $6 billion backlog. By selling to third parties, Archer can generate revenue immediately while its ride-share services business scales up.

Which eVTOL stock is a better buy today?

Joby and Archer are both early-stage start-ups in a young, undeveloped industry that they are both looking to get off the ground. For investors, they remain higher-risk stocks as they work through the FAA certification stages and hope to start commercial operations within the next year, while continuing to burn cash in the process.

Archer Aviation is taking an asset-light approach by leveraging Stellantis' massive manufacturing capabilities and selling aircraft directly to major airlines such as United Airlines, aiming to scale quickly without the capital burden of operating its own fleet.

Joby Aviation will be a vertically integrated company, handling everything from manufacturing to operating the air taxi network, which could help it capture higher, long-term profit margins than Archer. If you like its vertical integration and potential for higher profit margins in the long run, Joby Aviation stock is the way to go.

Courtney Carlsen has positions in Archer Aviation and Joby Aviation. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool recommends Delta Air Lines and Stellantis. The Motley Fool has a disclosure policy.